Soggy Queensland soaks Australia's economy (News Feature)

By Sid Astbury Jan 3, 2011, 2:45 GMT

Sydney - The good news is that 4 million pineapples will get to Australian supermarket shelves rather than be left to rot in Queensland plantations because roads are impassable in the worst flooding in 50 years.

'We've managed to get hold of a barge and we're confident we can get 90 per cent of the product out,' Tropical Pines marketing manager Joe Craggs said from his office near Rockhampton. 'The challenge is at the moment that we have to restrict the picking of our growers.'

The bad news for the Australian economy is that harvests of wheat, sugar and cotton are unlikely to follow those pineapples and get to market in anywhere near the volume and value that producers had hoped.

The projections for coking coal, the type used in steelmaking, are equally bleak.

Queensland ships half the world's supply of coking coal and 40 of its Bowen Basin coal mines are idle. Some are flooded and will take months to get back in production. Some are down because the railway lines to ports are under water.

'The mines have been losing about 100 million dollars a day in exports,' Resources Council of Queensland chief Michael Roche said. So far, production worth 1 billion Australian dollars (1 billion US dollars) has been lost.

Coal vies with iron ore as Australia's top export. It is also the fuel for over 90 per cent of the nation's electricity generation.

Roche is warning that full production will not return for months because pits would need to be drained and equipment repaired.

Just as prices for pineapples, lychees, mangoes and other plantation products are bound to rise as supply falls away, the big wet is pushing up coal prices.

The spot price for coking coal is heading towards 300 US dollars a ton, from its pre-flood level of 246 US dollars.

'There is a strong chance that 2011 could prove worse than 2008, when 7 to 8 million tons of metallurgical coal were lost due to flooding in Queensland,' investment bank Macquarie Group said in a statement.

Central Queensland University economist John Rolfe estimated that this time around lost production would be valued at more than 2 billion Australian dollars and the repair job at 1 billion Australian dollars.

As with coal, so with wheat: the flood crisis in Queensland is driving up global prices.

Industry lobby group AgForce predicts 1 billion Australian dollars in lost production with wheat likely to take the biggest hit.

AgForce president Brent Finlay said waterlogged wheat fields meant that the quality of some farmers' harvest would be downgraded all the way to animal feed.

'I understand sugar cane losses are a similar amount, and add to that the cotton and horticultural crops, and you soon come to 1 billion dollars,' he said.

Craig Pressler, who grows oranges in Emerald, one of 22 sodden towns, shrugs off the latest setback.

'You toughen up and you learn to endure it,' Pressler said. 'I'd like to look back in a couple of months and say 'what flood?''

He is hoping for a good harvest as early as July.

Jock Laurie, the National Farmers Federation president, stated the obvious: 'When you're losing big areas of production there'll be an impact on the market. There's no doubt about that.'

What is uncertain is whether producers will win or lose as lower volumes are offset by thicker profit margins.

Because Australia is such a significant player in world markets, the likelihood is that the buyer rather than the seller will pick up most of the bill for Queensland's flood damage.

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